Portfolio Optimization & Uncertainty Analysis

Oil and Gas Portfolio Optimization & Uncertainty Analysis

esi.portfolio™ is an analytic platform for evaluating decisions related to upstream oil and gas strategy development, portfolio management, capital allocation, and M&A. Our software can help companies optimize their portfolios and gain insights into their performance potential and their strategic alternatives at a corporate or business unit level. This is done in the context of their existing business, their risks and uncertainties, and their opportunities and objectives.

esi.portfolio brings together data (financial and operational) and the business context (business goals, assumptions, constraints, etc.) to address decisions involving risk or uncertainty.

Capabilities

Integrated, Predictive Business Modeling

Model strategic, operational and financial plans as a tightly integrated whole. Then, review business unit plans and budgets tied to specific initiatives and operations. Since the plans are interconnected, you can quickly assess how changes in one area would impact others. Equally powerfully, you can identify opportunities and challenges based on the interactions among your current business, opportunities, leading indicators and business drivers.

Constraint Based Optimization

Use the power of portfolio optimization to quickly sort through thousands or millions of options and combinations. The results identify the optimal mix and timing of new projects, expansions, cutbacks, acquisitions, joint ventures etc. You can optimize performance from a financial and/or operational perspective, considering multiple goals and constraints, and then easily derive budgets from that plan.

Evaluation of Risk and Uncertainty

Use predictive analytics to understand if you can succeed given the uncertainties in your business. Additionally, you can quantify the probability that specific objectives will be met and see the range of probable outcomes. You can use these capabilities to analyze how different assumptions for factors such as price, costs, timing or market uncertainty affect your ability to succeed.

Benefits

Analysis that previously took weeks, can be done in hours

Make decisions with a specific level of confidence that you will meet goals

Rapid and more complete evaluation of alternatives

Features

Data

Import data from any combination of economic software, spreadsheets or database

Gather asset descriptions from from multiple sources

Capture single economic descriptions for a project or probabilistic descriptions (multiple descriptions that can be used to reflect uncertain outcomes)

Break down the total portfolio results based on any attribute(s) in order to examine it from different viewpoints

Create generic projects that can be repeated over multiple years to represent opportunity type curves

Optimization

Optimize with custom operational and financial goals used as the optimization function or constraint

Use optimization to select assets, their optimal timing (shifting start dates within user specified parameters for each asset) and working interest based on the specified performance goals and constraints

Utilize manual selection of assets and their timing for ‘what-if’ analysis

Reflect your operational realities by specifying selection constraints and inter-dependencies among projects, including

When project can be selected

If a project is mandatory or optional

Simple dependencies (project A must be finished before project B can be started)

We needed to understand what made sense in terms of driving growth in production vs. generating attractive returns. We know there is no one single answer. Now we understand the capacity and capability of our portfolio.

Director of Strategic PlanningOil and Gas Company

We use Perspectives to see the optimal way for us to run our company. We’ve incorporated this into our process at the executive level.

VP PlanningOil and Gas Company

We heavily use the uncertainty analysis. We want to know what our portfolio can deliver with a certain level of confidence.

Exploration ManagerOil and Gas Company

We optimized one of our major regions on value within the context of the entire company in 15 minutes and added $900 MM to the value of the plan…this has changed the way we look at capital allocation.

Head of Exploration PlanningOil and Gas Company

The most valuable thing we gain from the whole exercise is insight from sensitivity analysis. We change parameters and re-run; that all happens quickly; and we gain insight from how items move in space and time.